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EnCana Corp. is doubling its dividend after reporting the biggest annual profit in Canadian corporate history.

In spite of a 72-per-cent drop in fourth-quarter earnings, the Calgary-based energy company reported profit for the year of $5.65-billion (U.S) in 2006. This converts to $6.58-billion (Canadian) at current exchange rates and far eclipses the $5.46-billion booked by BCE Inc. in 1999, during the height of the technology boom.

However, weaker natural gas prices are starting to have an impact on EnCana's results. The company reported fourth-quarter earnings of $663-million (U.S.), or 82 cents a share, from $2.37-billion, or $2.71 in the corresponding period a year earlier, when the company recorded substantial gains on the sale of a business.

Sales after royalties fell 38 per cent to $3.68-billion in the fourth quarter of 2006.

“We continued to fortify our future by adding close to double the proved reserves that we produced in 2006, at a competitive cost of about $2 per thousand cubic feet equivalent. Our natural gas production was up 4 per cent, while our key resource play production grew 12 per cent year-over-year,” said Randy Eresman, EnCana's president and chief executive officer.

“We achieved all this in a tough operating environment for the industry marked by record breaking activity levels.”

Bloomberg reported Thursday that EnCana had been expected to earn 88 cents a share in the fourth quarter according to an average of 15 analysts' estimates.

For the year, EnCana reported record profit of $5.65-billion, up from $3.42-billion in 2005. The 2006 results include after-tax gains of $2.38-billion “due to unrealized mark-to-market accounting for commodity price hedges, gains on sales of discontinued operations and tax rate changes,” the company reported.

EnCana has been selling off its foreign holdings and protecting itself from falling natural gas prices with natural gas hedges.

Mr. Eresman said 2006 marked the completion of EnCana's transformation “into essentially a pure North American producer focused on unconventional natural gas and integrated oilsands — a strategic position that we believe will create sustainable profitable growth for our company.

“As a reflection of our increased confidence in the sustainable nature of our North American unconventional business model, the board of directors has doubled our quarterly dividend to 20 cents a share,” Mr. Eresman said. The dividend will be payable on March 30, to shareholders of record on March 15.

EnCana was formed in 2002 by a merger of Alberta Energy Co. and PanCanadian Energy, to create what executives at the time called “a flagship, Canadian headquartered, world-class energy company.”

With files from David Ebner